Amazon Stock: Expected Boost As Adobe Projects Record Holiday Sales

Analysts project U.S. e-commerce spending growth will accelerate this holiday season – with help from big-time discounting. Holiday deals are expected to start next month, a potential boost for Amazon (AMZN) stock and shares of other e-commerce companies.

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A new report Wednesday from Adobe (ADBE) projects that U.S. online sales will reach $240.8 billion from Nov. 1 through Dec. 31, an 8.4% increase from the total spending in 2023. Last year, U.S. e-commerce spending grew 4.9% year-over-year during the traditional shopping period between Nov. 1 and Dec. 31.

Adobe sees the spending growth as likely powered by growing use of mobile devices for shopping and by consumers taking advantage of discounts, as Vivek Pandya, lead analyst at Adobe Digital Insights, told Investor’s Business Daily.

Discount hungry consumers are helping drive the “staying power” of the major holiday sales days, Pandya said, with so-called Cyber Week driving $40.6 billion in online spending, about 17% of all holiday e-commerce shopping. Cyber Week includes Thanksgiving, Black Friday and Cyber Monday.

“We’re expecting discounts to be on par with where they were last year – so about as deep as 30% across the season – but we’re expecting the response from the consumer to be much stronger, because they’re very value conscious,” Pandya told IBD.

Black Friday is projected to post the strongest overall growth, with U.S. e-commerce sales rising 9.9% year-over-year to $6.1 billion. However, Cyber Monday is still projected as the biggest overall day with sales of $13.2 billion, up a projected 6.1%.

Amazon Stock: Consumers Trading Down

Retail giants are already racing to offer deals ahead of Thanksgiving. Amazon will kick off its third annual two-day October sales event, called Prime Big Deal Days, on Oct. 9. Meanwhile, Walmart (WMT) announced last week that it will launch an early Holiday Deals event from Oct. 8 through Oct. 13.

The holiday season is always a crucial one for e-commerce stocks. And the strength of consumer spending will be watched closely. During second-quarter earnings season, e-commerce firms including Amazon, eBay and Etsy called out that shoppers were acting more cautiously.

Amazon stock fell in early August after the tech giant reported June-quarter revenue slightly below expectations. Amazon Chief Executive Andy Jassy told analysts that “customers continue to trade down on price when they can.” Jassy said larger purchases like computers and television are growing faster at Amazon than competitors but “more slowly than we see in a more robust economy.”

That was in line with what other e-commerce focused companies reported for the second quarter.

“Overall, companies continued to call out a budget-conscious consumer — Amazon guided a touch shy on expectations, Etsy (ETSY) and eBay (EBAY) struck a cautious tone despite better-than-feared results, and Wayfair (W) missed,” Bernstein analysts wrote to clients in late August.

Adobe Projects BNPL Growth

This is the final full week of the third quarter for Amazon, eBay, Etsy and other e-commerce players. The firms will likely provide analysts with their expectations for the holiday shopping period when they report Q3 results in late October and early November.

Meanwhile, Adobe’s projections are based on an analysis of more than 1 trillion visits to U.S. retail sites. Adobe also conducted a survey of more than 5,000 U.S. consumers.

Pandya told IBD that consumers have been increasingly seeking lower-cost items. But Adobe projects that could change with the holiday shopping season.

“People have shifted over the past few years to cheaper goods, where they’re buying off brand versions, store brand versions, variants of more premium luxury goods,” Pandya said. “But the holiday season kind of bucks that trend. Categories end up having broader overall discounts, especially sporting goods, electronics, appliances. Consumers think, ‘OK, well, I’m buying this for a family or friends, so I actually might want to stretch and actually buy that more premium product.'”

Another trend to watch, according to the report: Adobe projects buy-now-pay-later, or BNPL, purchases will grow 11.4% to total $8.5 billion during the holiday season. Last year, shares of BNPL provider Affirm (AFRM) jumped after Adobe said it saw a 20% increase in the use of BNPL during the weekend after Thanksgiving.

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